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Analysts Expect Breakeven For ResApp Health Limited (ASX:RAP) Before Long

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·3 min read
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ResApp Health Limited (ASX:RAP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ResApp Health Limited develops digital healthcare solutions to assist doctors and allow patients to diagnose and manage respiratory disease. With the latest financial year loss of AU$8.5m and a trailing-twelve-month loss of AU$7.8m, the AU$44m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which ResApp Health will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for ResApp Health

ResApp Health is bordering on breakeven, according to the 2 Australian Healthcare Services analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$2.5m in 2022. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 115% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving ResApp Health's growth isn’t the focus of this broad overview, but, take into account that generally a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that ResApp Health has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of ResApp Health to cover in one brief article, but the key fundamentals for the company can all be found in one place – ResApp Health's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

  1. Historical Track Record: What has ResApp Health's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ResApp Health's board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.